There is a saying, “It takes one to know one.” I am a convicted felon, former CPA, and former criminal CFO of Crazy Eddie. Today, I teach law enforcement agencies and professionals how to identify fraud and train them to catch the crooks. This blog investigates white-collar crime, securities fraud, accounting irregularities, corruption, and other related topics. Accounting irregularities investigated by me are referred to appropriate government agencies as a whistleblower.

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Wednesday, July 01, 2009

Banned Stock Promoter Carl Caserta Still Working for InterOil and Promoting Its Stock Despite Previous Denials

Documentation obtained by this blog shows that Carl Caserta, who in 1991 was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor” still has an available, current, and active email address (carl.caserta@interoil.com) at InterOil (NYSE: IOC). Other documentation obtained by this blog show that Caserta has continued helping InterOil promote its stock to investors. That documentation has been delivered to securities regulators. However, a January 2007 New York Times article reported that Caserta “stopped working for InterOil” after the company found out that he was barred from the securities industry by the SEC.

According to a 2005 report by short seller Citron Research, InterOil used Lighthouse Capital as its investor relations agent. As a principle of Lighthouse, Caserta’s job was “bringing InterOil around Wall Street attempting to attract buyers to the stock.” In 2007, the New York Times made inquiries to both InterOil and Lighthouse Capital about Caserta’s role in helping InterOil promote its stock to investors:

In 2004, Mr. Mulacek hired an investor relations executive named Carl Caserta, whom the Securities and Exchange Commission had barred from the securities industry almost two decades earlier, after he was accused of buying hundreds of thousands of stock shares for clients without their authorization. Mr. Caserta, who declined to speak on the record, stopped working for InterOil in 2005, according to his former employer, Lighthouse Capital Ltd.

Mr. Byker [InterOil Board Member] said the InterOil board was not aware of Mr. Caserta's history when he was retained. Mr. Dermedgoglou of InterOil said he was not aware that the firm had hired Mr. Caserta.

According to the New York Times article above, Carl Caserta “stopped working for InterOil in 2005” and InterOil board member Gaylen Byker told them that the company “was not aware of Caserta’s history when he was retained.” However, documentation obtained by me shows that Caserta still has a current email address at InterOil and continued working for the company, after the New York Times article was published in 2007.

InterOil used employees to blog about company while hiding their affiliation

In another stunt, Susuve Laumaea, Senior Manager Media Relations at InterOil, wrote an blog post promoting InterOil's business agenda in Papua New Guinea and apparently tried to conceal his relationship with the company. According to the article, Laumaea identified himself as:

However, the article failed to disclose Laumaea's employment by InterOil. I clinked on the link hidden under the author's name, Susuve Laumaea, and there was an InterOil email address (susuve.laumaea@interoil.com).

If Mr. Laumaea wants to cite journalism awards to impute his credibility for his article on InterOil, he should have disclosed his relationship with InterOil, too.

Anonymous Netherlands based blog promotes InterOil agenda

Another peculiar twist is an anonymous Netherlands based blog called Shareholdersunite.com that hypes InterOil's prospects to investors and acts as an apologist for the company's misdeeds. In addition, the blogger using the anonymous handle STPIOC, posts messages day and night promoting InterOil's agenda on the Yahoo message board.

For example, he wrote a blog post sarcastically trying to rebuke the article by the New York Times, detailed above, about the relationship between InterOil and Carl Caserta. He quoted the New York Times article:

“In 2004, Mr. Mulacek hired an investor relations executive named Carl Caserta, whom the Securities and Exchange Commission had barred from the securities industry almost two decades earlier, after he was accused of buying hundreds of thousands of stock shares for clients without their authorization. Mr. Caserta, who declined to speak on the record, stopped working for InterOil in 2005.”

Then, he offered the following excuse:

Yes, you read that right. IOC hired somebody who, almost two decades ago(!), was accused (convicted? The article doesn’t say so, and you’ll bet if he was convicted, this article would have mentioned it) of something improper. Not a hint that that ’something improper’ had anything to do with anything related to IOC (pretty hard, as it was almost two decades ago), and when IOC management found out, they released him.

Terrible! I’m shocked!! They hired somebody who was accused of something two decades ago. How could they! That makes me lose all my trust in IOC!! Think of it for a moment. Which company hasn’t hired somebody who was accused of something a couple of decades ago…

I’m not going to trust IOC because one of their employees tried to chat up my wife once. Terrible!

You see how he smears the company with really VERY VERY little substantive issues. So unsubstantiated, in fact, that you could smear ANY company this way, if you wanted to. And that this guy wanted to is beyond reasonable doubt after reading this.

First, he questioned whether Caserta was actually convicted of any securities violations by writing "was accused (convicted? The article doesn’t say so, and you’ll bet if he was convicted, this article would have mentioned it) of something improper."

Robert J. Gallaro and Carl Caserta, Registrant's president and vice-president, respectively, have submitted Offers of Settlement, which the Commission accepted. Registrant, Gallaro and Caserta, without admitting or deny-ing the allegations, consented to Findings and Order Imposing Remedial Sanctions which finds that they wilfully violated various antifraud provisions of the securities laws, and that Gallaro and Caserta wilfully aided and abetted Registrant's violations of other antifraud provisions of the Exchange Act, and the net capital, bookkeeping and reporting provisions of the Exchange Act.

While Caserta technically did not admit or deny the SEC allegations, he did in fact consent to "Findings and Order" which found that he "wilfully violated antifraud provisions of the securities laws...."

According to Shareholdersunite.com, when Interoil "found out" about Caserta being barred from the securities industry, "they released him." However, documentation delivered by me to securities regulators show that Caserta continued promoting InterOil stock to investors and has a current company email address.

Other recent developments

Fraud Discovery Institute, led by my close friend and convicted felon turned fraud fighter Barry Minkow, released a report showing how InterOil's press releases raising "investor expectations of a potentially huge commercially exploitable oil and gas find" inflated the company's stock price. Yet to date, InterOil has not reported a single barrel of proven commercially exploitable reserves." Additional information on Minkow's continuing investigation of InterOil can be found on his website InterNoOil.com.

Update:

According to my sources, InterOil disabled Caserta's email after my blog was posted.

Written by:

Sam E. Antar

Disclosure:

I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped Eddie Antar mastermind one of the largest securities frauds uncovered during the 1980s. I pleaded guilty to three felonies.

I am assisting Barry Minkow and Fraud Discovery Institute in researching InterOil and Minkow has a short position in Interoil. I have no position in InterOil securities, long or short.

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New Jersey State Assembly Republican Policy Committee (08/17/09)

“White collar crime is more brutal than violence crime. The actions of one or a few corrupt public officials and corrupt businessmen affect the livelihoods of thousands of people. Treat them with the same disdain as we do treat serial killers because white collar criminals are economic predators. We are serial economic predators." -- Testimony of Sam Antar